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Trading stocks doesn't lead people to physical dependence, nor does it typically ruin their lives.While this is true, what RH have done is turn trading into a form of gambling. That industry is HEAVILY regulated, and for a good reason: gambling addiction has ruined enough families' lives to warrant strict - and increasingly invasive - responsible gambling controls.[ß]
One of the most effective controls we have for gambling guardrails is the absolute rule of not allowing anyone to bet on credit. Not only do we block credit card deposits, we also have to restrict depositing via methods that themselves allow funding through credit cards. RH, on the other hand, has taken fire for not only allowing margin trades, but making it all too easy for non-institutionals to:
A) trade on margin (read: bet on credit) - and
B) trade complex options where the downside can be multiples of the perceived execution amounts
A gambling company doing this would have their license revoked and likely have their directors hauled before regulators to answer some very uncomfortable questions.
> Buy-and-hold will almost always lead to returns, provided that a portfolio is diversified enough.
Also true. But please keep in mind that RH encourages its userbase to engage in back-and-forth trading, using design tricks and visual cues to trigger impulses.[0] A responsible retail investor executing a long-term trade for a few thousand every two months is not the customer Robinhood makes their money out of.
Stating the obvious: I work for a gambling company.
ß: I have a pending piece on the various privacy invasions our industry is forced to engage in, but the first versions did not sit well with our comms team.
0: Before his leave, Matt Levine wrote about RH dropping at least some of the worst aspects: https://www.bloomberg.com/opinion/articles/2020-08-10/robinh...